The TOWS analysis. The first threat facing DD is the presence of many competitors, like starbucks, mcdonalds and krispy kreme.
They can potentially cause a large reduction in DD’s market share in coffee and baked foods. Another threat is that there are low barriers of entry into the coffee and donut industry, which actually gives rise to the threat above – presence of many competitors. The price of raw ingredients are also increasing, like soybean. It is a threat as DD is now using a reformulated cooking oil, made from soybean, for its donuts to eliminate trans fats.
The increase in raw material prices may result in an increase in DD’s operating cost. There is also an increasing concern of health issues globally as people are becoming more aware. However this is not a big threat to DD as they’ve removed trans fats from their donuts, and in essence, donuts have been accepted to be popular comfort food. Next we have the opportunities.
Coffee consumption is on the increase in Asia, especially in countries with rising disposable incomes such as China.There is also a donut craze in many asian countries including Singapore, Taiwan and Malaysia. With the rise of globalisation, the speed of the flow of information quickens, so everything is moving at a faster pace. This is an opportunity for DD as it has positioned itself as a quick stopover to get your beverage or snack fix.
There is also a growing acceptance of western influences in countries from the younger generation, where in Taiwan, youngsters would queue in line for hours for donuts.The possibility of a US recession is also an opportunity, because it seems that Americans like to drown their economic woes in rich sugary food, especially if that food is cheap. What else can you share with 12 people that costs under six bucks? As for the weaknesses, consumer reviews have revealed that quality of food in certain franchises are not as good as others, hence there is inconsistent quality of Dunkin’s Donuts. DD may also be outgrowing its name, as the DD is increasingly offering more products, and potential customers may be confused by the name, thinking that they only offer donuts.
However, executives at DD are considering dropping the words Donuts from their sign, but carefully considering the implications of doing that as well. As for the strengths, DD has a population of very loyal customers, known as the dunkin’ tribe. Visiting DD is like a religion, a part of their identity. In fact, DD was named number one in customer loyalty in the coffee and donut category by the 2007 brand keys Survey.
Their brand-name is also very well established globally, with franchises in over 31 countries. DD is also associated with a strong CSR image as a subsidiary of Dunkin’ Brands.